MP3: it's not secure, but it's genuine

On Monday morning, Liquid Audio Inc., MP3.com Inc., CDnow Inc. and a collection of record labels and other companies announced they were forming a coalition to watermark digitally distributed music.

On Monday morning, Liquid Audio Inc., MP3.com Inc., CDnow Inc. and a collection of record labels and other companies announced they were forming a coalition to watermark digitally distributed music.

The move is touted by the coalition's organizers as a step toward the day when music labels see value in adopting the Internet as a legitimate distribution channel, but critics argue that short of complete distribution security, the record industry will never be brought into the Internet fold.

The group of companies, dubbed the Genuine Music Coalition, promises a technology that will designate authorized MP3 audio files with a logo, marking them as the certified property of legal distributors. Coalition members readily admit that this deal will not single-handedly pull the record industry off the fence and into large Internet investments. The only thing that could do that, jokes MP3 CEO Michael Robertson, is "a million zillion dollars."

Rick Fleischman, senior marketing director for Liquid Audio, which is spearheading the coalition, says that Monday's announcement is part of an effort to establish the beginnings of a standardized currency for digital distribution. "We're trying to enable consumers to distinguish between pirated content and authorized content," says Fleischman. "We're taking a step here."

Fleischman argues that audio technology could be used to make watermarked music more attractive to consumers, by virtue of sound quality, for instance. Fleischman also reasons that, at the very least, basic consumer decency will make digital watermarking an effective tool in controlling distribution. "A lot of consumers actually care whether music is pirated or not," says Fleischman. "Most people, when given the opportunity to do so, won't take pirated things."

But that still may not be enough to spur music industry investment. MP3's Robertson is pessimistic. "There isn't anything the digital-music industry can do except offer value," he says. And Monday's announcement, as its creators admit, is only one of many steps on a very long road.

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